AsiaInfo (ASIA) has announced second quarter results for the period ended June 30, 2005. The company's second quarter net revenue met guidance, growing 49% year-over-year.

The net revenue for the second quarter was US$23 million, and earnings per basic share also met previously stated guidance of US$0.02.

Gross revenues for the second quarter were US$27 million, representing an increase of 20% year-over-year and a decrease of 8% sequentially. Gross margins increased to 41% from 39% in both the year-ago period and the previous quarter as a result of AsiaInfo's continued focus on reducing hardware passthrough while increasing high-margin software revenue.

Revenue from software products and solutions for the second quarter was US$16 million, an increase of 73% from the year-ago period and a slight increase over the previous quarter. Service revenue continued to grow, reaching US$7 million, an increase of 17% year-over-year and 6% sequentially largely due to the revenue recognition of one large service contract. Third-party hardware revenue in the quarter fell to US$3.8 million as the company continued to focus on higher margin software solutions and services.

During the second quarter, Lenovo-AsiaInfo contributed approximately 28% to net revenue and remains on-track to meeting its annual revenue target. Lenovo-AsiaInfo contributed 25% to software products and solutions revenue and 35% to service revenue for the quarter.

Total operating expenses for the quarter were US$11 million, an increase of 58% year-over-year and 2% sequentially. The year-over-year increase was largely due to the expenses associated with the integration of Lenovo-AsiaInfo.

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